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Eliot Murray  

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  • Oil: Prices Will Rebound [View article]
    Thanks Dan! Good points and agree on all.
    Jul 28, 2015. 09:12 AM | Likes Like |Link to Comment
  • Oil: Prices Will Rebound [View article]
    I appreciate your questions. You're right, shale is not the only oil, but shale is the 'incremental' oil. It explains the recent imbalance of supply vs demand. Once those wells are depleted, if prices are too low, there will be no incremental oil. Thus answers your question on old investment. Maybe marginal cost is cheaper than I realize, but shale will deplete soon and new investment will slow. #5- yes, it's in oversupply, but I think Munger's quote is thinking more long-term. I don't think he messes around with short-term forecasts. He is looking out 10 years (my assumption). #6 is a wildcard. Who knows? But I'm making a bet that the vehicle market will double. Demand is growing and OEMs need at least 18 months lead time to make things work. Only a matter of time. #2... fair enough, I need to do more research. But I think those countries are more oil-centric and can't print money or rely on other industries to prop themselves up. US can borrow money. Can SA? Don't know. Need more research on that one...
    Jul 28, 2015. 09:06 AM | Likes Like |Link to Comment
  • Oil: Prices Will Rebound [View article]
    Appreciate the compliment. But remember I said "IF" consumption doubles. Never was that plugged into a calculation. I'm just keeping that within the realm of possibilities. I do think China will exceed EIA estimates, but will it double? Who knows. China is a wildcard. And you could be right about marginal cost. But the depletion rate of fracking is very quick. When they deplete, the producers will choose new investment, or nothing. New investment cost is probably still $70-$90.
    Jul 28, 2015. 08:53 AM | Likes Like |Link to Comment
  • Oil: Prices Will Rebound [View article]
    What ^ he said.
    Jul 28, 2015. 08:28 AM | Likes Like |Link to Comment
  • Oil: Prices Will Rebound [View article]
    Touche
    Jul 27, 2015. 03:26 PM | 1 Like Like |Link to Comment
  • Oil: Prices Will Rebound [View article]
    I didn't specify a time frame.
    Jul 27, 2015. 01:41 PM | 1 Like Like |Link to Comment
  • Oil: Prices Will Rebound [View article]
    Agreed, equilibrium price changes, but not down by half! Price is not only a function of supply and demand, but also market emotions. Demand curve has moved inward, but will not stay there. My assumption, for better or for worse, but I think I'm safe long-term.
    Jul 27, 2015. 01:40 PM | 1 Like Like |Link to Comment
  • Oil: Prices Will Rebound [View article]
    Thanks for the compliment, Sebastian. I don't really do timing, though. To peg timing, you have to peg the short-term supply and demand in financial markets, and that's pretty much impossible. My guess is as good as yours on "when". Oil could very much tank for the next 6 months, but that's short term, and it has more to do with fear than with fundamentals. As long as you can hold for medium-to-long term, oil will come up.
    Jul 27, 2015. 01:34 PM | 1 Like Like |Link to Comment
  • Hysterical Selling Makes Buying Ebix Compelling [View article]
    Ken, I agree with your general sentiment, as I myself am a patient value investor willing to wait on price following value. In fact I just placed an order this morning. I'm merely trying to flesh out the specific short thesis, because as I see it, the majority of the short thesis was based on the Class Action and the SEC investigation. If both are indeed behind us now, it would seem the short sellers are really 'up a creek' now and the only thing keeping the share price under $20 is time. And if it doesn't jump immediately, I'm fine with it, I'm merely perplexed that there is still even a short thesis out there...

    CT Programmer, good point about the 15% in 15 days. That's a lot of movement in a short amount of time. I had not actually done the math on that, but it would seem that the short case is losing quickly...
    Jun 19, 2014. 11:10 AM | Likes Like |Link to Comment
  • Hysterical Selling Makes Buying Ebix Compelling [View article]
    Ken, thanks for the article. I have been keeping an eye on EBIX and the developments of their legal proceedings. It now seems that the Class Action is behind us, and there have been no new updates on the SEC investigation either. The stock in my opinion is worth at least $25-$30. Why didn't the stock move quickly back to around $20 after the news about the Class Action dismissal came out this month? IMO there is nothing holding it back now... is it the shorts?
    Jun 19, 2014. 08:53 AM | Likes Like |Link to Comment
  • Markel: Baby Berkshire Is On Sale [View article]
    Paul Wagner, because they've compounded their BV by 16%/yr for the last 2 decades, that's why.
    Oct 28, 2013. 01:03 PM | 1 Like Like |Link to Comment
  • Markel: Baby Berkshire Is On Sale [View article]
    You're welcome! If your thesis on the Fed is true, then any tapering would serve as a catalyst for MKL.
    Oct 24, 2013. 12:52 PM | 1 Like Like |Link to Comment
  • Markel: Baby Berkshire Is On Sale [View article]
    Thanks for the compliment. Not sure if the decision to split or not could be labeled "wise" or "foolish". It's simply a decision mgmt made. They probably have arrived at the same conclusion that BRK.A, AAPL, and GOOG have; and that is that splitting stock only serves to create more volume and volatility and creates value for only those that make money on trading commission.
    Oct 24, 2013. 12:50 PM | 4 Likes Like |Link to Comment
  • Markel: Baby Berkshire Is On Sale [View article]
    Thank you for the compliment. Yes, I'm actually curious about your question on unpaid losses as well. The one thing I can think of is that unpaid losses are heavily subjective and based on many managerial assumptions. Markel is traditionally (and refreshingly) very conservative in their reserves, so maybe Gayner's point is to not count this into the equation. Further, I think the reason for this may be that these unpaid losses on the balance sheet have already been debited on the income statement and therefore have already been reflected in the financial results in prior periods, so that the actual cash "payment" is just a follow-through on what has already been recorded. So it would be double-counting, in a sense (not sure, but I'm speculating on Tom Gayner's reasoning).

    One thing to note that I didn't include in the article is leverage. With Alterra's investments now included with MKL's, Gayner will have significant leverage with which to grow book value. Investments stand at $14.5B (Gross) currently, and SH Equity of $6.3B. If Gayner can compound those investments at 10% per year, that would mean a 23% growth in book. This is fundamental to the thesis above and should have been included.
    Oct 24, 2013. 12:45 PM | 3 Likes Like |Link to Comment
  • Oracle: 40% Upside And More For Patient Investors [View article]
    Christopher, thanks for your comments.

    I mention in the article that the best case is probably not realistic. Is it possible? Of course. Probable, no. The base case FCF CAGR is actually better for the last ten years than it is since 2009, so I consider the use of the smaller growth figure to be conservative. In the end, do we know what the growth will be? No, but the mechanics of a DCF model require that input.

    It seems that for every article I write, I get the same arguments about 1) discount rate and 2) organic growth. And I continue to disagree. No one has been able to convince me why only organic growth rates should be used, as if growth via acquisitions were some sort of "second class" cash flow. Where would Warren Buffett be today without the growth through acquisitions? If I were to value Berkshire in the 1970s, 80s,90s, would i only value the textile business? Of course not! wouldn't I value the company based on quantitative factors in addition to the fact that it had the BEST capital allocator in the world at the helm? Ellison has proven to be a good capital allocator through the years and I'm simply basing my valuation on those facts.

    Discount rate: I admit looking at a discount rate of 10% in a vacuum looks low, but I use the same discount rate across all my valuations, thereby regulating the discount rate to what it truly is: a measuring stick. At the very most, a hurdle rate. Using different discount rates across different asset classes only serves to muddy the waters of valuation. Why should one stream of cash flows be discounted at a different rate than the next? It is not a risk offset. That's what MOS is for.

    As stated in the article, margins will expand as revenue from renewals becomes a larger percentage of the total.

    I'm switching valuation methodologies simply because of time and real estate. I could've easily written another 1,000 words and clearly spelled out each methodology and scenario, but I think the readers and the editors both are educated enough to get the gist, and I hope they appreciate the conciseness.

    I don't agree with your law of large numbers thesis. See Berkshire, Microsoft, Apple, etc. All 3 have growth ahead and are much larger than ORCL.
    Oct 19, 2013. 10:40 AM | 2 Likes Like |Link to Comment
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